Bulova Corporation
Address:
1 Bulova Avenue
Woodside, New York 11377-7874
U.S.A.
Telephone: (718) 204-3300
Fax: (718) 204-3546
Statistics:
Wholly Owned Subsidiary of Loews Corporation
Incorporated: 1911 as J. Bulova Co.
Employees: 1,150
Sales: $154 million
SICs: 5094 Jewelry, Watches & Precious Stones; 3613 Switchgear & Switchboard Apparatus; 3679 Electronic Components, Not Elsewhere Classified
Company History:
Bulova Corporation is one of the largest and most venerable watch companies in the world. Among the most widely recognized brand names in its industry, Bulova produces watches in a wide variety of styles and is represented in every price range. At the upper end, the company's offerings include the Bulova Signature Group, the 14-karat gold Ultimé, and the famous Accutron line of luxury watches. In the lower price bracket, Bulova is represented by the Caravelle, a popular line originally introduced in the early 1960s. The company also makes specialty watches featuring other well-known logos. One example is the company's Sportstime line, which features watches representing teams in all of America's major sports leagues. Through its Bulova Technologies, Inc. subsidiary, Bulova is also active in the defense industry. Bulova Technologies specializes in making fuses and other components for military use. In the mid-1990s, it was diversifying into medical equipment and other areas to compensate for decreasing sales to the military. Loews Corporation, which has holdings in the hotel, tobacco, and insurance industries, owns 97 percent of Bulova Corporation's stock.
Joseph Bulova, a Czech immigrant, founded the company that bears his name in 1875. Only 23 years old at the time, Bulova opened a modest jewelry shop in New York City. Initially, Bulova sold mainly pocket watches and other jewelry, but over time he expanded his line of products. He was manufacturing and selling his own desk clocks and other timepieces by 1911, the year he incorporated the operation as J. Bulova Company. By that time, Bulova's pocket watches had already attained a reputation for excellence, and New Yorkers bought them as fast as he could make them.
Although wristwatches existed before World War I, it was returning veterans who made them fashionable. Once Americans became aware of their convenience, the market for wristwatches in the U.S. expanded quickly. In 1919, Bulova introduced the first full line of jeweled wristwatches for men. Over the next several years, Bulova added several other industry firsts, including the first ladies wristwatch line and the first line of diamond wristwatches. In 1926, the company sponsored the first nationally broadcast radio spot commercials, featuring the immortal "At the tone, it's 8 p.m., B-U-L-O-V-A Bulova watch time" tag line. Bulova began selling the world's first clock radio two years later. Meanwhile, the company's name was changed to Bulova Watch Company, Inc., reflecting the growing role of Arde Bulova, Joseph's son, in the firm's management.
Bulova continued to innovate in the areas of marketing and advertising over the decades that followed. The company launched the first million-dollar advertising campaign the watch industry had seen in 1931. Ten years later, Bulova aired the world's first television commercial. Broadcast just before a 1941 Brooklyn Dodgers baseball game, the advertisement showed a simple picture of a clock superimposed on a map of the United States. The message was simply "America runs on Bulova time."
The entry of the U.S. into World War II led to Bulova's large-scale involvement into military manufacturing. In addition to producing precision timepieces for military equipment, Bulova's mass production facilities also began turning out fuses, aircraft instruments, and other mechanisms for use in the war effort. Toward the end of the war, Bulova opened the Joseph Bulova School of Watchmaking. Its main mission was to help disabled veterans learn a trade upon their return from the war.
By this time, Arde Bulova was firmly in charge of the company, and he ran it very much as a one-man show. Under Arde, Bulova grew to become one of the market leaders among U.S. watchmakers. By the mid-1950s, the company's annual sales had reached $80 million. In 1954, Arde Bulova hired Gen. Omar Bradley, a World War II hero, as chairman of Bulova Research & Development Labs, Inc., a wholly owned subsidiary involved in developing the company's defense product business. Bradley was a close war-time friend of Harry D. Henshel, Arde Bulova's brother-in-law and one of the company's largest shareholders. When Arde Bulova died in 1958, Bradley was the logical choice to take over the chairmanship of Bulova, although it took a committee of 14 department heads to cover the huge range of responsibilities that Arde had refused to delegate in the past.
Meanwhile, a new contender had risen to challenge Bulova's dominant position in the watch industry. Throughout the second half of the 1950s, Bulova faced stiff competition from the Timex watch, made by U.S. Time Corporation. Priced far lower than Bulova products, Timex eroded Bulova's market share enough to cause the company's revenue to slip to $62.8 million by 1961. Under Bradley and CEO Harry B. Henshel, Bulova began to fight back. First, they began to institute modern management practices, replacing the old-fashioned methods of the autocratic Arde Bulova. More importantly, the company developed Accutron, the world's first electronic watch.
Accutron represented the first major revolution in clock technology in three centuries. Before it was available in commercial products, the Accutron timer mechanism saw important action in the space program. When the Accutron watch finally became available to consumers in late 1960, it was a huge success. Far more accurate than any other watch commercially available, the Accutron was the first to be sold with a written guarantee of accuracy to within one minute a month. Accutron technology became the standard for the next decade both on human wrists and in orbiting satellites.
In 1963, Bulova introduced another line of watches, the Caravelle. The Caravelle was the company's answer to Timex and the other cheaper watch lines that had been eating away at Bulova's customer base for several years. Caravelle was priced much lower than the company's other watches, and it was hoped that the line would catch on among younger buyers who would later graduate to more expensive models. With the addition of Accutron and Caravelle, Bulova was able to regain much of the momentum it had lost to Timex and the many nameless brands of cheap watches that had hit the market over the previous decade. The company also eliminated outlets that were selling Bulova watches at discount prices, a practice company officials felt tarnished the Bulova name and reputation for excellence. By fiscal 1964, the year the company shipped its 250,000th Accutron watch, Bulova's revenue finally surpassed its pre-slump level, reaching a new high of $73 million.
The next several years were good ones for Bulova. By 1965, sales had grown to $84 million, about 20 percent of which was generated by defense and industrial products, including timing mechanisms and fuses. There were 58 different Accutron models for the wrist and 11 Accutron desk and table clocks by that time. Bulova controlled an estimated 15 percent of the market for high-priced men's watches. Throughout this period, the company also worked hard to increase its sales abroad. By 1967, 20 percent of Bulova's sales were generated in foreign lands. Bulova watches were being sold in 89 countries by that year, up from 19 in 1961. The fact that most of Bulova's watch movements were assembled in Switzerland added to its international flavor, and in 1967 the company acquired Universal Genève, a Swiss manufacturer of upper-end clocks and watches. Company sales leaped to $124 million for that year. Meanwhile, Bulova remained NASA's timekeeper of choice. Timing devices built by Bulova saw action during the first moon walk in 1969, as well as on subsequent missions.
By the beginning of the 1970s, Bulova had sold nearly 1.5 million Accutrons, and the company's watches could be bought in 110 markets around the world. The company was operating 20 plants, 12 of them in the United States. Even at that time, Bulova was still the only manufacturer of jeweled-movement watches in the United States. In 1971, the company launched a joint venture with a Japanese outfit, Citizen Watch Co., to make Accutrons for sale in Asia. Bulova was offering four basic lines of watches by 1973, covering every price range: the low-priced Caravelle, starting at $10.95; the Bulova line, which cost $35 and up; the still booming Accutron, whose bottom price had dropped to $95; and the Accuquartz, introduced in 1970 as the first quartz watch sold in the United States.
In 1973, Bulova's status as a fiercely independent company came to an end when Gulf & Western Industries, Inc. bought a stake in the company. That interest eventually grew to 29 percent ownership. Bulova's hot streak began to run out about the same time. One reason for the turnaround was that the company seemed to have miscalculated the popularity of digital watches. Bulova stood by idly while competitors were churning out and selling new quartz digital models in huge numbers. The company eventually started selling solid-state digital watches under the name Computron, but not before falling far behind in the battle for that market. Another problem was a dramatic inflation of the Swiss franc in relation to the U.S. dollar. This development made it difficult for Bulova to compete cost-wise, since so much of its manufacturing was done in Switzerland. For 1975, the company lost $25 million on sales of $204 million.
With losses mounting in 1976, Gulf & Western sold its 26.8 percent interest in Bulova to Stelux Manufacturing Company, a watch components maker based in Hong Kong. With Stelux in control of the company, Henshel was replaced as chief executive by C. P. Wong, managing director of Stelux. It was hoped that Bulova would give Stelux a U.S. outlet for its goods, while Stelux would provide the impetus for Bulova's full-scale assault on the digital market. Unfortunately, the purchase of controlling interest by a foreign-owned company made Bulova ineligible for defense contracts, which had accounted for about 10 percent of sales the year before and were one of its few profitable areas. In order to circumvent those regulations, the company formed a subsidiary, Bulova Systems & Instruments Corporation, to perform its defense work under the management of a team of trustees.
The relationship with Stelux did not prove to be as mutually beneficial as had been hoped, and by 1977 Wong had resigned as CEO of Bulova. He gave up his spot as a director the following year. Between fiscal years 1976 and 1978, Bulova's losses totaled $48 million. In 1979, the 30 percent of Bulova's stock owned by Stelux was bought by Loews Corporation, the holding company run by Laurence Tisch, a close friend of Henshel's. Andrew Tisch, Laurence's 30-year-old son, was named president of Bulova, while Henshel stayed on as chairman.
Under the influence of Loews, Bulova gradually began to claw its way back into competitive form. However, the transition was not seamless. In 1982 the company spent $36 million to take some of its less viable watches off the market, and this move contributed to a $27 million loss for the year. Realizing that the company had cut back on quality control, many retailers had given up on Bulova by this time. Under Loews's management, renewed emphasis was placed on quality inspection. Loews also sold off a number of Bulova's assets between 1981 and 1987, including its electronics division, its main building in Queens, and facilities in Italy and Switzerland. By 1984, Loews owned 95 percent of Bulova's common stock, and Bulova turned an operating profit of over $7 million.
During the late 1980s, Bulova worked hard to revamp its image and regain the respect its name once commanded. In order to attract younger customers, the company began making watches under licensing agreements with such firms as Benetton and Harley-Davidson, and with the National Football League. To appeal to the more highbrow market, Bulova began offering watches based on famous works of art. In 1989, Andrew Tisch took over the leadership of another Loews subsidiary, and was replaced at Bulova by Herbert Hofmann. That year, sales of fuses to the government generated 30 percent of the company's revenue.
By 1990, Bulova was the only major American-owned watch maker left in the business, and its $182 million in sales was dwarfed by the $2.6 billion in revenue generated by industry leader Seiko of Japan. Remaining in the black continued to be a struggle for the company. Bulova posted net losses in 1989 and 1990, as trendy watches such as the popular Swatch stole more market share from old-timers like Bulova. Convinced that classic models were finding their way back into fashion, Bulova reintroduced the Accutron in 1991 after seven years out of circulation. The new Accutron line included 26 different styles, and ranged in price from $395 to $1095.
As the 1990s moved on, the company continued to seek ways to restore its former luster through daring marketing and advertising initiatives, though its budget could not match those of its giant foreign competitors Citizen and Seiko. In 1993, Bulova launched a highly publicized advertising campaign featuring nude celebrities wearing Bulova watches. The theme of the campaign was "I'd feel naked without my Bulova." Meanwhile, the company's defense-oriented subsidiary, now called Bulova Technologies, Inc., began diversifying into commercial areas in the face of shrinking military spending. Non-defense business was scheduled to account for a quarter of the subsidiaries revenue for fiscal 1994.
Several years have passed since Bulova existed as a selfsupporting company. For some time, it has relied on an inflow of capital from its parent Loews Corporation to meet its annual financial needs. Nevertheless, going into the mid-1990s the Bulova name and reputation continued to hold sway with a significant number of consumers. Watch fashions come and go quickly, but there always seems to be at least a little room in the market for the company that put the first timepiece on the moon.
Principal Subsidiaries: Bulova Technologies, Inc.
Further Reading:
Barmash, Isadore, "Bulova Tries to Make Up Lost Time," New York Times, June 13, 1976, p. F3.
------, "Bulova Seeking to Take the Watch Beyond Time," New York Times, October 5, 1989, p. D1.
"Bring on the Revolution," Forbes, December 1, 1972, p. 72.
"Bulova Earnings Likely to Wind Up at New Peak," Barron's, October 30, 1967, p. 38.
"Bulova Fights for its Contracts," Business Week, August 30, 1976, p. 28.
"Bulova--Industry Leader," Financial World, August 9, 1967, p. 5.
The Bulova Story, Woodside, New York: Bulova Corporation.
"Bulova Watch Gets a Hong Kong Partner," Business Week, June 14, 1976, p. 29.
"Bulova Watch Gets a Tisch as President," New York Times, October 18, 1979, p. D2.
"Bulova Watch Ticks Off Smart Advance in Profits," Barron's, March 1, 1965, p. 20.
"Bulova's Henshel Goes Against the Trend," Business Week, July 14, 1973, p. 60.
"Crucial Hours for the Swiss Watch Industry," Fortune, August 15, 1969, p. 116.
Finch, Camilla, "Traditional Watch May Wind Bulova Into Better Future," Crain's New York Business, December 24, 1990, p. 13.
"Good Time," Time, June 16, 1967, p. 85.
"Multinational Approach Helps Bulova Beat Competitors' Time," Industry Week, March 22, 1971, p. 19.
"Successor to a One-Man Regime," Business Week, November 21, 1959, p. 104.
Tisch, Andrew H., "Why Marketing Ticks at Bulova," Marketing Communications, June 1982, p. 26.
"A Troubled Bulova Bides its Time," Business Week, June 16, 1975, p. 22.
Underwood, Elaine, "Bulova 'Buffs' up its Image," Brandweek, November 29, 1993, p. 6.
"The Watch That Saved Bulova," Forbes, November 15, 1964, p. 42.
"Wong Moves in at Bulova," Business Week, June 28, 1976, p. 98.
Source: International Directory of Company Histories, Vol. 13. St. James Press, 1996.
